The elements that alter sales activity and property prices in a market can be viewed two ways.
The first is the way fundamental drivers materially and measurably shape price and activity. Interest rates, tax changes, employment, conflicts overseas and housing supply all sit in this category, and you’ll see values rise and fall in response to them. But even at their most impactful, it takes time for their real effect to wash through household budgets and show up in the numbers that get reported.
The second is sentiment and, in comparison to the first category, sentiment is a speedboat. This is where one or two rate cuts, a settled conflict, or a run of cheerful headlines see buyers come flooding back to open homes in a flourish. Actual housing supply hasn’t changed, but the mood has.
The thing is, in property the “mood” does plenty of the heavy lifting in the short term, so understanding the gap between those two categories is one of the most useful things a buyer can grasp right now, because that gap is where the opportunity sits.
Most experienced commentators would agree that it takes several months for a change in the cash rate to properly work its way through the economy.
The Reserve Bank has lifted the cash rate three times this year, taking it back to 4.35 per cent, then held in June while it waits to see what the damage looks like. The most recent increase has barely landed on anyone’s repayment schedule. The same lag applies in reverse: when cuts eventually arrive, the relief will take just as long to filter through.
But buyers won’t wait months to form an opinion about the change. They’ll feel better or worse the moment the announcement is made, and that translates into an immediate shift in sentiment. Ask any agent and they’ll tell you an open home will be either flooded with, or deserted by, potential buyers depending on which way rates move.
Cotality’s national Home Value Index fell 0.4 per cent in June, its largest monthly fall since December 2022 and the third consecutive decline. Across the June quarter, combined capital city values were down 1.3 per cent, led by Sydney at ‑3.2 per cent and Melbourne at ‑2.6 per cent.
Now look at the annual figure from that same index. National dwelling values were still up 7.3 per cent over the 12 months to June. Brisbane was up 17.4 per cent. Perth 23.9 per cent.
Both numbers are accurate, but the real trap with property data is that it always looks backwards. By the time it confirms a turn, the market has already happened.
But sentiment is different.
Look at how quickly the mood shifted this year after the federal budget changes. Combined capital city auction clearance rates have sat below 50 per cent since the last week of May and slid into the low 40s by late June. Sales volumes are down more than 16 per cent on a year ago and listings have climbed.
Nobody’s mortgage got more expensive on the particular weekend clearance rates dropped ten points. What changed was confidence, in response to something else entirely such as a contractionary federal budget, a conflict overseas, a sense that it might be smarter to wait and see. I’ve watched this play out for decades. An open home with 20 groups through the door one month gets two the next. Same house, same street, same asking price.
And it can flip back just as fast.
So how do you avoid poorly timed decisions when sentiment shifts quickly?
First and foremost, don’t take your property advice from a news bite. Part of the reason sentiment moves so violently is that most of what people read about property isn’t designed to inform them. It’s designed to be clicked on. A 0.4 per cent monthly movement becomes a crash. A single quarter of growth becomes a boom.
Between July 1992 and July 2022, Australian markets moved through six growth periods and six declining periods, according to CoreLogic figures. Corrections aren’t aberrations; they’re just part of a normal cycle. If your buying decision changes with this morning’s headline, you’re using a speedboat’s instruments to steer a cruise liner.
Instead, rely on advice from an experienced, independent representative. After 25 years in operation, we’ve been exposed to it all before. We can see clearly what today’s market is responding to, and whether those peaks and troughs are driven by sentiment rather than by fundamental change.
Right now, there are great long-term buying opportunities, with less competition at inspections and auctions. Vendors are negotiable and a good number are genuinely motivated. Discounts are real. Terms are flexible. And there’s an unusually high volume of off-market stock, because uncertain sellers want their agent to test the water before committing to a campaign.
In short, right now is when we see the best buys. But when the turn comes, that list of great opportunities shortens immediately. Competition returns. Vendors dig in and stop discounting. Terms tighten. Off-markets go to full campaign.
Now point isn’t to rush. Rushing is how people buy badly, and a poor purchase in a soft market is still a poor purchase. The idea is to be prepared, so that when the right property appears you can act with confidence and without hesitation.
That means finance approval that’s current, not something you’ll sort out later. A buyer’s brief that’s written down and specific. Street-level research in your target pockets, so you recognise value the moment you see it. A walk-away number set well before you’re in the heat of a negotiation. And a team of experienced professionals by your side.
Do that work and you only need to move when a quality property comes up at a sensible price.
Nobody rings a bell at the bottom of a market, and I’ve never met anyone who can name the day in advance. Instead, trust the long-term trend, not the short-term mood. Right now, those two things are pointing in opposite directions, and that is exactly the sort of moment that rewards buyers who are ready.
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